RENTAL TORTURE AS RISING COSTS TO BITE DEEPER
... and there’s no relief in sight with all indicators pointing to increasing financial pain for those unable to buy into the Gold Coast property market
THIS image is the reason why renters cannot win on the Gold Coast.
While the adage may advise that a picture says a thousand words, this one says a million.
This house at Varsity Lakes sold just two weeks ago for $1.06m … a pretty hefty price for a little house on a small 400sq m block.
Assuming a 20 per cent deposit was made, the resulting $848,000 mortgage will cost – according to the advertised rate at Commonwealth Bank – exactly $3303 per month, or just over $760 per week.
But this same house is advertised for rent right now at a staggering $900 per week.
It certainly puts paid to the notion that the property market is no place for investors. Sale prices may well be sky-high, but it seems the return is worth it.
After all, who needs negative gearing when you can positively make a $140 per week profit straight after settlement? Even with the cost of insurance and rates, that’s a tidy return.
It might seem an outrageous price to pay for someone else’s mortgage, but given that a duplex on the same street – with one less bedroom and less than half the space in square metres – is asking $800pw, it practically seems reasonable.
But the truth is that when it comes to the rental market, we passed reasonable a long time ago.
Now we live in a moment where a million-dollar mortgage is more affordable than renting the exact same property in the exact same market.
Where once it was advised to rent cheaply while saving up for a deposit and ongoing mortgage repayments, now it seems the only option is to pay a fortune in rent forever – the opportunity to save is over. Unless, that is, you’re approved to borrow that million-dollar mortgage.
Even with interest rates tipped to rise, the growth in rental prices is set to outstrip that increase.
Statistics show that it’s now cheaper to rent in Sydney, with a median average rental price of $722 per week, than on the Gold Coast, with a median average rental price is $770 per week.
The data from Christopher Housing Boom and Bust Report shows rental costs for all dwellings on the Gold Coast rose by 20.2 per cent in 2021, while house rental prices jumped a whopping 27 per cent, and the price to live in a high-rise grew
17 per cent higher.
And the news is only set to get worse.
The opening of international borders, while great news for our tourism, hospitality and education industries, means yet another surge in demand for rental properties.
With students and seasonal workers seeking rental accommodation, and longterm leases rolled over into holiday letting, buyer agent Pete Wargent says the result will be soaring rent increases.
“We can expect to see national rental price growth rising into the 10 to 20 per cent range forthwith, with most rental markets around the country already experiencing tight conditions,” says the Buyersbuyers co-founder and chief operating officer.
“Reserve Bank of Australia research has previously shown that new migrants and arrivals to Australia tend to have only a limited impact on the housing turnover rate, because most new arrivals are renters initially, especially international students.
“That means a lot more demand for rentals is coming in 2022. As the border reopens, many parts of Australia may experience chronically tight rental markets.
“With interstate migration to Queensland the highest in over 15 years, rental vacancies are already tight across the coastal regions, and we expect this to continue as the borders reopen.”
In fact, when it comes to investment, Mr Wargent tips that apartments in Palm Beach, Miami and Tugun will see rent soar sky-high, making them the perfect place to buy into a mortgage.
If only it was that easy. With such a surge in demand, it seems all but impossible to break the rental cycle. Meanwhile, those with the cash – or at least the deposit – can snap up investments that make a perfect passive income stream.
Statistics show that it’s now cheaper to rent in Sydney